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Managing politics: Key needs a J2

Helen Clark had H2. John Key has charm and quick uptake. That was not enough to handle Richard Worth.

Heather Simpson, with whom a segment of the international community is now becoming acquainted, was Clark’s chief of staff, go-between, message carrier and enforcer. She was H2.

She could speak for Clark as if she was Clark. She negotiated with small parties. She fixed those who got out of line or favour. She fixed leaks, imagined and real.

Even senior ministers deferred to H2. Smaller fry quailed.

If Key had had a J2 at his elbow, he would not have put out a bland statement about Worth resigning for “personal” reasons, then within half an hour have had to call a hasty press conference and then gone into more detail than he needed to.

His political management of the Worth affair was wanting. He acted as if he was still running a private company. A private company can tell the public to go hang. A Prime Minister’s wages are paid by the public. That is called politics, to which Key is still a comparative newcomer — witness his failure to register the danger in Christine Rankin.

Worth, an intelligent but tangential man, never got the hang of politics and its behavioural protocols. That he was made a minister, even outside the cabinet, belied his contribution. Then came the several embarrassments.

They would have clanged a J2’s alarm bells. A J2 would have registered Phil Goff’s phone call in April as a potential time bomb.

The Worth affair is minor. Key will ride it out. But it shows how much he has yet to learn. His initial long leash to Rodney Hide over super-Auckland was another example.

Learning political management will become important as he and his government lose their sheen, as more things go wrong and as he confronts big policy decisions.

Take, for example, Treasury Secretary John Whitehead’s “positioning” speech last week on how to lift economic productivity growth.

Whitehead’s speech was strikingly bold and broad. That reflects Bill English’s injunction to top public servants to go forth and multiply ideas. English wants debate and backed Whitehead going public.

After years of being slapped down by Clark ministers for the “wrong” ideas after being pressed to think innovatively, the top brass has taken a while to figure whether English really means debate or will revert to reticence and caution as ideas flow and debate opens up.

But they have now begun actively to ponder how to respond — how to find people with ideas, how to develop them and how to present them.

The Treasury was among the first.

Whitehead was blunt in his scan of the economy’s failings: a “rather mixed” “enterprise performance”; a “low level of research and development”; a “long tail of underachievement” in skills; “a lot of room for improvement in investment”; and problems managing fresh water.

Add in distance from most markets, reliance on commodities and “poor value and excessive spending” in the public sector which had damaged the tradable sector’s competitiveness.

His theme: if we want investment and people here to make the economy smarter and richer, we must offer something unique or especially attractive. Being “good” won’t do. New Zealand will have to be “better than good”. “Never underestimate the importance of the signals we give.”

In addition to sharpening the public sector (which he said is “a speech for another day”) Whitehead focused on taking advantage of the large flows of people in and out, extensive tax reform and extensive regulatory reform.

Most post-speech comment focused on tax and especially his call to tax capital gains. The logic is powerful: a rise in an investment property’s or share’s value is income and in not taxing it this country is rare among those with developed economies. But Key would need real, not amateur, public relations advice and management skill to carry that with the public. (In fact, he has said he won’t.)

A capital gains tax would help Whitehead with another aim: to lower personal and company tax rates. He also canvassed a tradeoff with higher consumption taxes. (He did not go the next step to taxing pollution, emissions and resource use instead of work and investment, which suggests that is off English’s agenda.)

Whitehead canvassed “fundamental changes” in regulation, including of the labour market. And he posited a zero tariff and “removing (foreign) investment screening on all but the most sensitive of items”.

That’s quite a list. There is more to come. Doing the half of it would take some selling to voters.

Last year nice-guy Key backed off difficult sales pitches in favour of bland reassurance and centrism. Now he is Prime Minister. If he really meant last year that he aims to lift the economic game, he will have to lift his own game to sell policies his advisers say are needed. He will have to get good at political management.

That is the lesson from the Worth affair (and Rankin and Auckland). He has a lot to learn. Not easy without a J2.